ASC 978-10: Ensuring Real Estate Brokerage Compliance with Accounting Software

Posted In | ASC Accounting | Real Estate, Contractors & Construction

Real estate brokerages are subject to unique accounting and financial reporting requirements under the Financial Accounting Standards Board (FASB)'s Accounting Standards Codification (ASC) 978-10. This standard provides guidance on financial reporting specifically for the real estate industry, with a focus on the recognition, measurement, and disclosure of real estate transactions. This article explores how implementing robust accounting software can help real estate brokerages stay compliant with ASC 978-10 and maintain accurate financial records.

 

Overview of ASC 978-10

ASC 978-10, also known as Real Estate – Sales, offers guidance on accounting for revenue recognition, costs, and profit or loss related to the sale of real estate. The standard aims to ensure that real estate brokerages report their financial performance consistently and transparently. The key provisions of ASC 978-10 include guidelines on:
 

1. Recognition of revenue from the sale of real estate

 

2. Allocation of costs and profits associated with real estate transactions
    

3. Determination of the sales price, including any discounts or concessions
    

4. Disclosure of significant judgments and estimates affecting the recognition and measurement of revenue, costs, and profit or loss
    

Implementing Accounting Software for Real Estate Brokerages

To stay compliant with ASC 978-10 and maintain accurate financial records, real estate brokerages should consider implementing accounting software designed specifically for their industry. Such software can offer the following benefits:
 

1. Revenue Recognition: Real estate brokerage accounting software can automate the complex process of revenue recognition, ensuring that revenue is recognized in accordance with ASC 978-10 guidelines. This includes proper timing and allocation of revenue among different real estate transactions and parties involved.
    

2. Expense Tracking: Real estate brokerages incur various expenses related to property acquisitions, development, and management. Accounting software can help track and categorize these expenses, enabling brokerages to allocate costs accurately and calculate profit or loss for each transaction.
    

3. Integration with Other Systems: Real estate accounting software can integrate with other systems such as customer relationship management (CRM) and property management software. This integration allows brokerages to streamline their financial reporting and provides a holistic view of their operations, enhancing efficiency and decision-making.
    

4. Financial Reporting: With built-in reporting capabilities, accounting software can generate financial statements that adhere to ASC 978-10 requirements. These reports provide transparency to stakeholders and allow brokerages to monitor their financial performance in real-time.
    

5. Scalability: As real estate brokerages grow and expand, their accounting needs may change. Accounting software designed for the real estate industry can scale with the business, accommodating growth and ensuring that brokerages can continue to meet their compliance obligations.
    

Real estate brokerages face unique accounting challenges under ASC 978-10, and implementing industry-specific accounting software can help them navigate these complexities. By automating key processes, integrating with other systems, and offering robust reporting capabilities, accounting software can ensure that real estate brokerages remain compliant with financial reporting standards while also increasing efficiency and supporting business growth.